We’ve finally had the time to digest the Q3 prints – for which we provide our observations and lessons learned. We also answer the question: “How can I make money from now until year-end?” as well as provide investor feedback now that we are through the last earnings cycle of 2019. Our note has a lot of cool charts – such as how each company did relative to Consensus expectations for Q3, and where Consensus estimates have gone up and gone down for both 2019 and 2020.
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This (11/8/19) was a rollercoaster of a day, with SSP opening -5%, but ending the day +7% (vs. S&P, flat). There were many different sets of numbers to go through after a really long week; and retrans continues to be a bit of a pain point. However, the fact that core is trending +4% and political is already coming in ahead of expectations put retrans concerns to the wayside. To characterize this print: Q3 beat, the Q4 guide was a touch light, but our 2019 and 2020 estimates remain relatively unchanged.
This is going to be short and sheet as we now say……given we had 18 companies report and my wrist hurts.
On an as-reported basis for Q3, it looks like core and political advertising were better than expected; while retrans missed.
When we look at PF, overall revenue came in line likely due to political, while core missed by 40bps and retrans was again ~200bps lighter.
Here is what we’ve been hearing this long insane week – which is going to be followed by another one of what I will call “WORST WEEKS EVER.” Yep – you guessed it. Media earnings time. Thankfully though, Hans (CBS) and Franz (VIAB) are reporting the week after….
We already updated our NXST, SSP, SBGI, and TGNA estimates in separate notes the past couple of weeks (NXST, SSP, and TGNA were on 10/15, while SBGI was on 10/29). So, in this note, we’re playing a little bit of catch up with the other two broadcasters – specifically reducing Q4 sub estimates for GTN and MDP – all related to AT&T. We also summarize our expectations for all our Local coverage going into the Q3 print.
Our primer on the Local TV industry.
The hottest names this week were ATUS (369 bps better than the S&P), NFLX (310 bps), CHTR (355 bps), GTN (354 bps), and SBGI (306 bps).
In this note, we remind you of the three transactions that SSP closed this year as well as update our model. We warn you upfront that this was messier than we had anticipated – partly because our base numbers for 2020 (both Local and National) came down mostly on higher expenses; and partly because SSP is realizing a temporary retrans dis-synergy related to the CW stations/channels it acquired from both Cordillera and NXST-TRCO. At the end of the day, we raise our as-reported 2019 revenue by 5% (we are in-line with Consensus) and 2020 revenue by 11% (5% above Consensus). But while we raise our as-reported 2019 EBITDA by 10% (1% above Consensus), we lower 2020 by 6% (2% below Consensus). The lower 2020 EBITDA numbers flowed through to the outer years, impacting our price target, which drops to $15 from $18. We maintain our Peer Perform.
After being on the road most of this week (NYC meetings and the Midwest) and getting in way late last night, we wanted to share some of the lovely Media sentiment that will brighten your weekend….not.
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